5 Reasons you want to Pivot early

Enter the Pivot

Recent years have made entrepreneurship much more structured, and created a common language to discuss ventures and startups. The seminal book “The four steps to the epiphany” by Steve Blank was a founding moment for the lean startup movement, and when Eric Ries published “The Lean Startup” the term Pivot entered into mainstream entrepreneurship discussions.

A Pivot is defined as any fundamental change to a core aspect of the venture, but often without a change to the overarching vision. A pivot might be (among other things) a change of customer need, customer segment, business model, solution or technology. A pivot typically follows a hypothesis which did not prove out in the real world, and so armed with new fresh insights from the market you pivot your startup or venture to course correct and move ahead.

The misconception and why you want to pivot early

Some entrepreneurs mistake the concept of the pivot to mean you can simply fix things as you go. In reality a pivot is not like calling a "do-over" on the playground. The core misconception is “If we got something wrong we will simply pivot”, and running ahead too quickly with this notion. This leads to spending precious time developing the wrong product, trying to scale up sales too early and other costly mistakes. Performing a pivot can be critical to the success of your startup, but it should not be taken too lightly. This is precisely why you want to pivot early. Here are a few of the key reasons pivots are costly when performed late in your entrepreneurial journey (and not only from a financial perspective).

Pivots go against momentum and inertia

When you perform a pivot, you need to redirect the momentum and inertia you've built. The later your Pivot, the more momentum you have to redirect. You are more likely to have activities in-flight when you make a decision to pivot, some of which are not as easy to redirect. You might have business commitments that are not easy to unwind. Especially when some of the inertia is outside your direct company and staff, this becomes even more difficult. Sometimes you will end up carrying baggage due to such commitments when the damage from unwinding them might be bigger than the overheads.

You need to carry your people through a Pivot

Perhaps your most valuable asset is your team. Your team bought into something when they joined your startup and decided to take the risky journey with you. When you pivot you need the entire team to stay fully engaged and be fully with you in the course correction to succeed. Depending on the timing and type of pivot you perform, you might need to make changes to the team itself which is never an easy thing to do. For example, changing the customer segment or sales channel might mean your sales leader is no longer the right fit for the company.

You’ve already spent money and more critically precious time

The later you perform your pivot, the more capital you burned through. Not only that, it’s possible some of this spend became sunk cost and doesn't benefit the new course you are taking after the pivot. Beyond capital, you spent precious time before realizing a pivot is necessary. This is perhaps the most precious resource of all - unlike money you cannot raise more time.

Your Investors put more than money into your venture

When you pivot late, you most likely have investors and/or shareholders supporting your venture. Beyond money they potentially invested their own time and personal connections in your venture. A pivot can change a fundamental aspect that got them interested in your venture, and might put their own reputation at some risk. Just like you need to take your team along on a pivot, you must do the same with your investors and some of them might not be as happy with the change of direction.

You run a higher risk of not performing the pivot even when necessary

The farther along you are on the journey, the harder it becomes to truly listen to the signals and insights that are indicating a pivot might be necessary. Everyone is prone to confirmation bias, and you could be overly concerned about sunk costs and external commitments. You simply run the risk that you avoid a very necessary pivot and persevere when you really shouldn’t.

You should still Pivot – but aim to do it early!

I’m not trying to convince you not to pivot. It is better to pivot despite all the difficulties than to avoid it. Sometimes it is impossible to anticipate a pivot – for example, an competitor could suddenly launch something in your market and force you to pivot. Most other times though, taking action early on your journey to identify potentially needed pivots is possible.

Getting the signals from the market is possible in very early stages, way before you starting building your actual product. Validate your hypothesis early and pull in your pivots: You will avoid wasting unnecessary capital and time, pivots are easier to perform, you carry less baggage, and you are more likely to be open and hear the signals leading you towards success.